Full Judgment Text
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CASE NO.:
Appeal (civil) 867 of 2006
PETITIONER:
Mayar (H.K.) Ltd. & Ors.
RESPONDENT:
Owners & Parties, Vessel M.V. Fortune Express & Ors
DATE OF JUDGMENT: 30/01/2006
BENCH:
RUMA PAL & P.P. NAOLEKAR
JUDGMENT:
JUDGMENT
[arising out of Special Leave Petition (Civil) No. 17906 of 2004]
P.P. NAOLEKAR, J. :
Leave granted.
This appeal is preferred by the plaintiff-appellants challenging the
judgment of the Division Bench of the Calcutta High Court dated 23.8.2004
whereby the plaintiffs’ suit filed in Admiralty jurisdiction was directed to
remain permanently stayed and the bank guarantee furnished by the
defendant-respondents in the suit was directed to stand immediately
discharged. The plaintiff-appellants were also directed to pay the costs.
Appellant No. 1 Mayar (H.K.) Limited filed admiralty suit in the High
Court at Calcutta on 27.3.2000 in admiralty jurisdiction along with
appellants Nos. 2 to 5 with whom a contract to sell the goods was entered
into by plaintiff / appellant No.1, against the defendant-respondents alleging,
inter alia, that plaintiff / appellant No. 1 (hereinafter called "A-1") is a
company incorporated under the laws of Hong Kong and engaged in the
business of export and import of timber logs. By and under a Charter Party
Agreement entered into on 7.1.2000 between plaintiff No. 1-Mayar (H.K.)
Limited and defendant No. 2-Trustrade Enterprises PTE Ltd., a company
incorporated under the appropriate laws of Singapore and carrying on
business, inter alia, at 101, Cecil Street 10-04 Tong. Eng. Building,
Singapore (description given in the plaint) an owner on behalf of the vessel
M.V. "Fortune Express" (hereinafter referred to as "the vessel"), a foreign
vessel flying the flag of Singapore, the defendants agreed to carry on board
the vessel a quantity of 5200 CBM Barawak Round logs or upto vessel’s full
capacity for discharge at the Port of Calcutta, India. In or about January
2000, A-1 purchased various quantities of Malaysian Barawak logs for the
purpose of shipment to the Port of Calcutta and to sell the same to various
third parties having their offices in West Bengal, India. Under five bills of
lading dated 21.2.2000, 17.2.2000, 24.2.2000, 15.2.2000 and 18.2.2000, the
defendants agreed to carry on board the said vessel 1638 pieces of logs of
different quality measuring 5325.2941 CBM from various ports of Malaysia
to the Port of Calcutta, India. At the request of A-1, the five bills of lading
were split into 17 bills of lading at the instance of the defendants so as to
facilitate sale by A-1 to various buyers in West Bengal, India. The
appellants 1 to 5 are the holders in due course and/or endorsees of the six of
those bills of lading which dealt with the 642 pieces of logs. As per the
stowage plan of the vessel, out of 642 logs, the subject matter of bills of
lading, which were loaded on board the vessel, 578 logs were lying on the
deck of the vessel. The vessel arrived at the Port of Calcutta on 7.3.2000
and started discharging the cargo lying on its deck from that date till
15.3.2000. At the time of the discharge of the cargo lying on the deck of the
vessel, it was found that 456 logs out of 578 logs which were lying on the
deck of the vessel were missing and had been short-landed. It has been
alleged that in breach of the defendants’ duty as a carrier and/or bailees for
reward and/as evidenced by the six bills of lading, the defendants have failed
to deliver 456 logs whereby the plaintiffs have suffered loss and damage.
The plaintiffs have also alleged that the defendants also acted in breach of
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their contract entered into with A-1 being the shipper under the aforesaid six
bills of lading. The defendants have acted in breach of the Charter Party
Agreement entered with A-1 by failing and neglecting to carry on board the
vessel from the loading point to the discharge port, the agreed quantity of
logs. As the logs were not delivered, all the plaintiffs are entitled to claim
from the defendants the proportionate value and expenses incurred on
account of the said missing 456 logs which is approximately valued at Rs.
1,30,19,688.44p. as per the particulars stated hereinbelow :
1. Proportionate value of 456 logs of aggregate
value of Rs.1,56,87,298.44p. Rs.1,09,13,902.56p.
2. Proportionate port charge and other charges
paid in respect of 456 logs. Rs. 4,14,130.72p.
3. Proportionate custom duty paid in respect
of 456 logs. Rs. 5,00,264.73p
.
4. Proportionate insurance payment made
in respect of 456 logs. Rs. 10,91,390.43p
---------------------
----
Rs.1,30,19,688.44p.
---------------------
----
The plaintiffs have also claimed from the defendants interest on the
aforesaid sum at the rate of 24 per cent per annum until realization of the
entire sum from the defendants. The plaintiffs have prayed for the arrest of
the vessel along with her tackle, apparel and furniture.
On 27.3.2000 itself, the learned Single Judge of the Calcutta High
Court passed an order that it appears that the claim of the plaintiffs arises
out of short-landing of the goods as mentioned in the affidavit of arrest
amounting to a total sum of Rs.1,30,19,688.44p. The vessel in question is a
foreign vessel and does not have any assets within the jurisdiction of the
Court. The said vessel is now lying at Kidderpore Dock and if the said
vessel is allowed to ply from the said dock then the decree that may have
been passed in the suit in favour of the plaintiffs will frustrate the
proceedings, as the defendant-respondents have no assets within the
jurisdiction of the Court and in view thereof the Marshall is directed to arrest
the said vessel M.V. Fortune Express along with her tackle, apparel and
furniture. It was made clear in the order that if the said vessel furnishes a
bank guarantee for the amount mentioned in the order, with the Registrar,
Original Side, High Court, Calcutta, they will be at liberty to apply before
the Court for vacation of the order. On 12.4.2000, the Punjab National
Bank, Calcutta, submitted a letter of intent before the Registrar, High Court,
Original Side, Calcutta regarding furnishing of the bank guarantee on behalf
of the defendant-respondents seeking order of the court for release of the
vessel. On submission of the letter of intent for furnishing the bank
guarantee on behalf of the owners and parties interested in the vessel, i.e.,
the respondents, dated 12.4.2000, the learned Single Judge of the Calcutta
High Court on 12.4.2000 itself has passed an order releasing the vessel from
arrest vacating the order of arrest dated 27.3.2000. The order was passed
without prejudice to the rights and contentions of the owners of the vessel
that the suit is not maintainable. On 17.5.2000, the Punjab National Bank
furnished the bank guarantee binding itself and the defendants for the
payment of the amount of Rs.1,30,19,688.44p. The guarantee incorporated a
term that the defendants and the Bank do thereby submit themselves to the
jurisdiction of the Court.
On 7.7.2001, the defendants filed an application purported to be
under Order VII Rule 11 of the Code of Civil Procedure 1908 (for short "the
Code") alleging therein that the suit filed by the plaintiffs is liable to be
dismissed in limine and as a consequence thereof the bank guarantee is
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liable to be released, on the grounds that as per Clause 3 of the Bill of
Lading (for short "BOL") the court having jurisdiction to entertain the suit,
is the court of the carrier’s country and thus the Calcutta High Court has no
jurisdiction to entertain the suit; that the contract for carriage was for deck
cargo and, therefore, liability of the carrier was excluded by application of
Clause 2 and Clause 9 read with Clause 19 of BOL and the same being
binding on the plaintiffs the defendants are not at all liable for payment of
the damages; and that the suit does not disclose any cause of action. The
learned Single Judge by his order dated 1.7.2002 dismissed the application
filed by the defendants for dismissal of the suit relying on the decision of
this Court in Chittaranjan Mukherji vs. Barhoo Mahto, AIR 1953 SC 472,
that the defendants having received a favourable order from the Indian court
cannot turn around and challenge the jurisdiction of the very court at a later
stage. It was also held that for application of Clause 9 of BOL and
exonerating the carrier from its liability and responsibility, it would be
necessary to prove that the loss or damage is the result of any act, neglect or
default on account of any servant of the carrier who is in the management
of the deck cargo, which is a matter of evidence and cannot be ascertained at
the preliminary stage.
Aggrieved by the said order of the learned Single Judge, an appeal
was preferred before the Division Bench of the Calcutta High Court by the
defendants which was allowed by order dated 23.8.2004 The Division
Bench of the High Court has held that under the forum selection clause
(Clause 3) of BOL any dispute arising therefrom shall be decided in the
country where the carrier has its principal place of business governing the
law of such country and, thus, the Singapore Court alone will have
jurisdiction to entertain the suit. Some interesting findings have been
arrived at by the Division Bench which have material bearing in deciding
the present appeal and, therefore, they are referred herein. The Division
Bench has said that the vessel (Fortune Express) having sailed into the
Calcutta Port and the claim being of an admiralty nature the Court had
jurisdiction by the laws of India in the same manner as it would have
jurisdiction if a Singapore trader happened to open up a place of business
within the local limits of the ordinary original civil jurisdiction of the
Court. The issue is not one of possession of jurisdiction but of its exercise.
If the parties have chosen a particular forum and a particular set of laws in
the world to govern them, then they are, in the large majority of ordinary
cases, to be held to their bargain and not to be allowed to depart therefrom
only because one party finds it convenient and, therefore, chooses to do so.
The finding as regards the chosen forum of Singapore Court and to be
governed by the laws of Singapore has been arrived at by the Division
Bench only on the basis of the plaintiffs mentioning that defendant No. 2
Trustrade Enterprises PTE Ltd. is a company incorporated under the
appropriate laws of Singapore and is carrying on its business at Singapore.
The Court has also observed that the Singapore law with regard to the
discharge of liability is quite different. According to the Singapore Act, the
Hague Rules have been somewhat amended. For voyages which start from
ports of Singapore or even the goods which are first shipped from there, the
Act seems to include even deck cargo as goods. There is not a single line in
the plaint stating either that the Singapore law is the applicable law or that
by reason of the application thereof the goods are not deck cargo. As
regards the liability of the defendants, the Court has found that admittedly
the goods were carried on the deck and there is no liability of the carrier if
the deck cargo is lost. The Court has further held that the defendants by
submitting the bank guarantee before the Court did not submit to the
jurisdiction of the Court, particularly so when the order dated 12.4.2000
passed by the learned Single Judge specifically mentioned that the order was
being passed without prejudice to the rights and contentions of the owners of
the vessel that the suit is not maintainable. As regards the submission of the
plaintiffs that compelling the plaintiffs to file a suit for damages at this late
stage at Singapore Court would be most unjust because the application by
the defendants for treating the plaint off the record of the Court had been
filed on 7.7.2001 when the order for arrest of the vessel was passed on
27.3.2000 and particularly the plaintiffs’ right would be jeopardized
because under Article 3(6) of the Hague Rules, 1924 the carrier and the ship
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had been absolved of all liability in respect of the loss or damage if suit were
not brought within one year after delivery of the goods or the date when the
goods should have been delivered, the Court has opined that under Article 3,
Clause 6 of the Hague Rules, 1924, the limitation had been with respect to
the goods. However, Article 1(c) of the Hague Rules, 1924 mentioned that
the cargo which had been carried on deck would not come under the
definition of ‘goods’. Except 135 logs, all others were described in BOL as
deck cargo and thus the limitation prescribed for filing of the suit would
have no application. The Court has further observed that though the law of
Singapore on the point had been different in the sense that even the deck
cargo would be considered under the definition of ‘goods’ , but the plaintiffs
had not mentioned a single word in their plaint regarding the applicability of
the Singapore law. It was further held that the plaintiffs, from the very
outset of the suit, were aware of the fact regarding the appropriate forum and
hence now at this stage they could not plead to reap the benefit from their
own fault. The Court held that the plaintiffs’ plaint suppressed the forum
selection clause relating to the law governing the contract and approached a
wrong court to get an ex parte arrest order against the defendants’ vessel. It
has been observed that the suppression of fact regarding forum selection
was of serious nature and that would be sufficient to dismiss the suit filed by
the plaintiffs.
As regards the contention of the plaintiffs that the defendants having
submitted to the jurisdiction of the Court, could not challenge the
jurisdiction of it at a later stage, the Court has held that the defendants
raised the objection regarding the maintainability of the suit at the first
opportunity itself which is also reflected in the order. It has been held by the
Court that by release of the vessel the defendants have not taken advantage
of the Court’s order because instead of the arrested ship lying in wait to
satisfy the decree that might be passed a sufficient money equivalent
provided by the owners and the parties interested in the ship lies so in
wait.
On consideration of the submissions made by the parties before the
Division Bench and the relevant provisions of BOL and the provisions of the
Indian Carriage of Goods by Sea Act, 1925, the Division Bench has arrived
at the following findings :
(i) The parties have chosen the Singapore Court and the Singapore
law by express contract. They should be held bound to it.
(ii) Arrest of the ship was obtained from the Calcutta High Court in
Calcutta wrongfully since it was in breach of the above clause.
(iii) The defendants never submitted to the Calcutta jurisdiction as they
made reservation about the maintainability of the suit within about
a fortnight of the arrest when the order for furnishing Bank
Guarantee and release of the vessel was obtained on their behalf.
(iv) Save for 135 longs, the lost logs being 456 in number are covered
entirely by the exclusion clause agreed upon which excludes
liability for any defaults of the shippers’ servants in the
management of the deck cargo.
(v) Deck cargo is that which is described as such in the Bill of Lading
and is also carried as such. The admissions in the plaint are clear
as to the deck cargo nature of the said balance number of logs and
the admissions in the plaint are equally clear that the loss thereof
occurred due to the actions or neglect of the defendants’ servants.
(vi) The plaintiffs suppressed the jurisdiction clause and the liability
exclusion clause; arrest of the ship being obtained thereupon the
Court should decline to proceed any further on the improper plaint,
improperly proceeded with by the plaintiffs."
The Court has, inter alia, recorded a finding that Order VII Rule 11 of the
Code might not in terms be applicable as the plaint discloses the cause of
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action fully and wholly, but that by reason of the suppression contained in it,
had the exclusion clause been inserted, the cause of action would be lost
with regard to the lost cargo excepting for 135 logs. Again, under the said
Rule the suit might not be held to be barred as such, because the Calcutta
High Court does have the necessary admiralty jurisdiction to entertain the
plaint and even cause arrest of the ship. The case is not so much on the
terms of Order VII Rule 11 of the Code as upon the inherent jurisdiction of
the Court, which it always possesses to reject or stay, a plaint by treating it
as complete and by notionally removing the suppression for that purpose.
After treating the plaint as complete in that manner, if the Court finds that
the cause of action is lacking, it can reject the plaint just as it could reject a
plaint had it been properly presented along with all relevant and necessary
materials. It can also similarly stay a suit permanently.
The aforesaid finding clearly indicates that the order of permanent
stay of the suit was made by the Division Bench not because the plaint is
liable to be rejected on the grounds that it falls within the parameters of
Order VII Rule 11 of the Code or the suit is liable to be stayed in exercise of
the powers under Section 10 of the Code or that the Court has passed an
order under Order VI Rule 16 of the Code which has not been complied
with. The Division Bench, in fact, has exercised the jurisdiction for stay of
the suit as the plaintiffs did not disclose the forum selection clause whereby
the Court at Calcutta had no jurisdiction to entertain the suit and further
suppressed the fact that the claim in the suit shall be governed by the laws
applicable in the Singapore Court and that plaintiffs have no case because
the claim is in regard to deck cargo.
Under Order VII Rule 11 of the Code, the Court has
jurisdiction to reject the plaint where it does not disclose a cause of
action, where the relief claimed is undervalued and the valuation is
not corrected within a time as fixed by the Court, where insufficient
court fee is paid and the additional court fee is not supplied within
the period given by the Court, and where the suit appears from the
statement in the plaint to be barred by any law. Rejection of the plaint in
exercise of the powers under Order VII Rule 11 of the Code would be on
consideration of the principles laid down by this Court. In T. Arivandandam
vs. T.V. Satyapal and Another, (1977) 4 SCC 467, this Court has held that if
on a meaningful, not formal, reading of the plaint it is manifestly vexatious,
and meritless, in the sense of not disclosing a clear right to sue, the Court
should exercise its power under Order VII Rule 11 of the Code taking care
to see that the ground mentioned therein is fulfilled. In Roop Lal Sethi vs.
Nachhattar Singh Gill, (1982) 3 SCC 487, this Court has held that where the
plaint discloses no cause of action, it is obligatory upon the court to reject
the plaint as a whole under Order VII Rule 11 of the Code, but the rule does
not justify the rejection of any particular portion of a plaint. Therefore, the
High Court could not act under Order VII Rule 11(a) of the Code for striking
down certain paragraphs nor the High Court could act under Order VI Rule
16 to strike out the paragraphs in absence of anything to show that the
averments in those paragraphs are either unnecessary, frivolous or vexatious,
or that they are such as may tend to prejudice, embarrass or delay the fair
trial of the case, or constitute an abuse of the process of the court. In ITC
Ltd. Vs. Debts Recovery Appellate Tribunal, (1998) 2 SCC 70, it was held
that the basic question to be decided while dealing with an application filed
by the defendant under Order VII Rule 11 of the Code is to find out whether
the real cause of action has been set out in the plaint or something illusory
has been projected in the plaint with a view to get out of the said provision.
In Saleem Bhai and Others vs. State of Maharashtra and Others, (2003) 1
SCC 557, this Court has held that the trial court can exercise its powers
under Order VII Rule 11 of the Code at any stage of the suit before
registering the plaint or after issuing summons to the defendant at any time
before the conclusion of the trial and for the said purpose the averments in
the plaint are germane and the pleas taken by the defendant in the written
statement would be wholly irrelevant at that stage. In Popat and Kotecha
Property vs. State Bank of India Staff Association, (2005) 7 SCC 510, this
Court has culled out the legal ambit of Rule 11 of Order VII of the Code in
these words :
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"There cannot be any compartmentalization, dissection,
segregation and inversions of the language of various
paragraphs in the plaint. If such a course is adopted it would
run counter to the cardinal canon of interpretation according to
which a pleading has to be read as a whole to ascertain its true
import. It is not permissible to cull out a sentence of a passage
and to read it out of the context in isolation. Although it is the
substance and not merely the form that has to be looked into,
the pleading has to be construed as it stands without addition or
subtraction of words or change of its apparent grammatical
sense. The intention of the party concerned is to be gathered
primarily from the tenor and terms of his pleadings taken as a
whole. At the same time, it should be borne in mind that no
pedantic approach should be adopted to defeat justice on hair-
splitting technicalities."
From the aforesaid, it is apparent that the plaint cannot be rejected on
the basis of the allegations made by the defendant in his written statement or
in an application for rejection of the plaint. The Court has to read the entire
plaint as a whole to find out whether it discloses a cause of action and if it
does, then the plaint cannot be rejected by the Court exercising the powers
under Order VII Rule 11 of the Code. Essentially, whether the plaint
discloses a cause of action, is a question of fact which has to be gathered on
the basis of the averments made in the plaint in its entirety taking those
averments to be correct. A cause of action is a bundle of facts which are
required to be proved for obtaining relief and for the said purpose, the
material facts are required to be stated but not the evidence except in certain
cases where the pleadings relied on are in regard to misrepresentation, fraud,
wilful default, undue influence or of the same nature. So long as the plaint
discloses some cause of action which requires determination by the court,
mere fact that in the opinion of the Judge the plaintiff may not succeed
cannot be a ground for rejection of the plaint. In the present case, the
averments made in the plaint, as has been noticed by us, do disclose the
cause of action and, therefore, the High Court has rightly said that the
powers under Order VII Rule 11 of the Code cannot be exercised for
rejection of the suit filed by the plaintiff-appellants.
Similarly, the Court could not have taken the aid of Section 10 of the
Code for stay of the suit as there is no previously instituted suit pending in a
competent court between the parties raising directly and substantially the
same issues as raised in the present suit.
It is contended by Mr. R F Nariman, learned senior counsel appearing
for the defendant-respondents that the court has inherent discretionary
jurisdiction to stay the proceedings in appropriate matters where the court
thinks fit to do so. This jurisdiction of the court to stay the proceedings in
appropriate cases is not limited to the jurisdiction conferred on the court in
India under Section 10 of the Code. It is distinct from the jurisdiction
conferred by the Code and for this proposition reliance was placed on
Bhagat Singh Bugga vs. Dewan Jagbir Sawhney, (28) AIR 1941 Calcutta
670, Hansraj Bajaj vs. Indian Overseas Bank Ltd., AIR 1956 Calcutta 33,
Krishnan and Another vs. Krishnamurthi and Others, AIR 1982 Madras 101
and M/s. Crescent Petroleum Ltd. vs. "MONCHEGORSK" and Anr., AIR
2000 Bombay 161. In the aforesaid matters, the Court has recognized the
inherent power of the High Court to stay the proceedings in appropriate
cases. In Bhagat Singh Bugga’s case (supra), it is said that the Code is not
exhaustive and does not expressly provide a remedy in all eventualities and,
therefore, the Court has in many cases where the circumstances warrant it,
and the necessities of the case require it, to act upon the assumption of the
possession of an inherent power to act ex debito justitiae and to do real and
substantial justice. In exercise of this power, the High Court can restrain a
defendant by injunction in another Court in spite of provision of Section 10
of the Code. In Hansraj Bajaj’s case (supra), the High Court put a note of
caution while upholding the inherent power of the High Court to stay the suit
though filed in a competent court when it said:
"The jurisdiction to stay an otherwise competent suit is to
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be sparingly exercised and within the strict limits of the rigorous
condition, whose principles may be stated thus : the first principle
is that a mere balance of convenience is not a sufficient ground
for depriving a plaintiff of his right of prosecuting his action in or
his right of access to the competent Courts of the land.
The second principle is that the Court stays an action
brought within the jurisdiction in respect of a cause of action
arising entirely out of the jurisdiction when it is satisfied that the
plaintiff will thereby suffer no injustice whereas if the action is
continued the defendant will, in defending the action, be the
victim of such injustice as to amount to vexation and oppression
and which vexation and oppression would not arise for the
defendant if the action were brought in another accessible Court
where the cause of action arose.
In such a case the Courts have also insisted that the onus is
upon the defendant to satisfy the Court, first, that the continuance
of the action would work an injustice because it would be
oppressive or vexatious to him or would be an abuse of the
process of the Court and, secondly, also that the stay will not
cause any injustice to the plaintiff. \005\005"
In Krishnan’s case (supra), the Court laid down that if the ends of justice
require or it is necessary to prevent the abuse of the process of the court, the
court has jurisdiction to stay the trial of a suit pending before it, but the
exercise of such power would depend upon the facts and circumstances of
each case.
For the sake of convenience, we may reproduce certain relevant
clauses of the Bill of Lading (BOL) and provisions of the Indian Carriage of
Goods by Sea Act, 1925 (hereinafter referred to as "the Act") as under :
Bill of Lading
"3. Jurisdiction
Any dispute arising under the Bill of Lading shall be decided in the
country where the carrier has his principal place of business and
the law of such country shall apply except as provided elsewhere
herein."
"9. Live Animals and Deck Cargo
shall be carried subject to the Hague Rules as referred to in Clause
2 hereof with the exception that notwithstanding anything
contained in Clause 19 the Carrier shall not be liable for any loss
or damage resulting from any act, neglect or default of his servants
in the management of such animals and deck cargo."
"19. Optional Stowage Unitization
(a) Goods may be stowed by the Carrier as received or, at Carrier’s
option, by means of containers, or similar articles of transport use
to consolidate goods.
(b) Containers, trailers and transportable tanks whether stowed by
the Carrier or received by him in a stowed condition from the
Merchant, may be carried on or under deck without notice to the
Merchant.
(c) The Carrier’s liability for cargo stowed as aforesaid shall be
governed by the Hague Rules as defined above notwithstanding the
fact that the goods are being carried on deck and the goods shall
contribute to general average and shall receive compensation in
general average."
Indian Carriage of Goods by Sea Act, 1925
"2. Application of Rules : Subject to the provisions of this Act,
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the rules set out in the Schedule (hereinafter referred to as "the
Rules") shall have effect in relation to and in connection with the
carriage of goods by sea in ships carrying goods from any port in
India to any other port whether in or outside India."
"SCHEDULE
RULES RELATING TO BILLS OF LADING
Article I
Definitions
In these Rules the following expressions have the meanings hereby
assigned to them respectively, that is to say \026
xxx xxx xxx
(c) "Goods" includes goods, wares, merchandises, and articles of
every kind whatsoever, except live animals and cargo which by the
contract of carriage is stated as being carried on deck and is so
carried; [unamended clause]
(c) "Goods" includes any property including live animals as well
as containers, pallets or similar articles of transport or packaging
supplied by the consignor, irrespective of whether such property is
to be or is carried on or under the deck" [as amended by Act
44/2000]
"Article III
Responsibilities and Liabilities.
xxx xxx xxx
(6) \005. \005.. \005.
In any event the carrier and the ship shall be discharged from all
liability in respect of loss or damage unless suit is brought within one
year after delivery of the goods or the date when the goods should
have been delivered.
*[This period may, however, be extended if the parties so agree
after the cause of action has arisen:
Provided that a suit may be brought after the expiry of the
period of one year referred to in this sub-paragraph within a further
period of not more than three months as allowed by the court]*.
\005.. \005.. \005.."
---------------
*Added by Act 28/1993
While working out the equity between the parties and directing
permanent stay of the suit and release of the bank guarantee, the Division
Bench was mainly impressed by two factors that (i) Clause 3 of BOL gives
exclusive jurisdiction to the Singapore Court to try and decide any dispute
arising between the parties under the BOL and the parties shall be governed
by the law which is applicable in Singapore; and (ii) the goods lost being
the deck cargo the carrier ship has no liability in respect of the loss or
damage as per Clause 9 of BOL. The Division Bench has said that Clause 3
and Clause 9 of BOL are material clauses which should have been pleaded
by the plaintiff-appellants in their suit and, therefore, abuse of process of the
Court.
As per law of pleadings under Order VI Rule 2 of the Code, every
pleading should contain, and contain only, a statement in a concise form of
the material facts on which the party relies for his claim or defence, as the
case may be. Thus, the facts on which the plaintiff relies to prove his case
have to be pleaded by him. Similarly, it is for the defendant to plead the
material facts on which his defence stands. The expression ‘material facts’
has not been defined anywhere, but from the wording of Order VI Rule 2 the
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material facts would be, upon which a party relies for his claim or defence.
The material facts are facts upon which the plaintiff’s cause of action or
defendant’s defence depends and the facts which must be proved in order
to establish the plaintiff’s right to the relief claimed in the plaint or the
defendant’s defence in the written statement. Which particular fact is a
material fact and is required to be pleaded by a party, would depend on the
facts and circumstances of each case. In A.B.C. Laminart Pvt. Ltd. Vs.
A.P. Agencies, Salem, (1989) 2 SCC 163, this Court has considered the
ambit of the exclusion clause whereby the jurisdiction of one court is
excluded and conferred upon another court by agreement of the parties and
said that in a suit for damages for breach of contract, the cause of action
consists of making of the contract, and of its breach, so that the suit may be
filed either at the place where the contract was made or at the pace where it
should have been performed and the breach occurred. When the court has to
decide the question of jurisdiction pursuant to an ouster clause, it is
necessary to construe the ousting expression or clause properly to see
whether there is ouster of jurisdiction of other courts. When the clause is
clear, unambiguous and specific accepted notions of contract would bind the
parties and unless the absence of ad idem can be shown, the other courts
should avoid exercising jurisdiction. As regards construction of the ouster
clause when words like ‘alone’, ‘only’, ‘exclusive’ and the like have been
used, there may be no difficulty. Even without such words in appropriate
cases, the maxim ‘expressio unius est exclusio alterius’ \026 expression of one
is the exclusion of another \026 may be applied. What is an appropriate case
shall depend on the facts of the case. In such a case, mention of one thing
may imply exclusion of another. When certain jurisdiction is specified in a
contract, an intention to exclude all others from its operation may in such
cases be inferred. It has, therefore, to be properly construed.
The allegations in the plaint are to the effect that the parties have
entered into a contract on 7.1.2000 to carry on board the vessel M.V.
Fortune Express under the six split bills of lading 642 logs from the port of
Sarawak, Malaysia for discharge at the port of Calcutta, India. As per
stowage plan, 578 logs were lying on the deck of the vessel. At the time of
the discharge of the cargo lying on the deck of the vessel, it was found that
456 logs out of 578 logs were missing and had been short-landed. The
plaintiffs claimed a decree for the proportionate value of 456 logs, port and
other charges, custom duty and proportionate insurance payment. As per the
plaintiffs’ allegation, the logs, which were to be carried on the vessel owned
by the defendants, had not been delivered at the port of destination. Thus,
all the material facts on the basis of which the plaintiffs claimed the decree
are alleged in the plaint. As the logs were not delivered at the port at
Calcutta, the port of destination, the part of cause of action arose within the
jurisdiction of the Calcutta Court and, thus, the suit filed by the plaintiffs at
Calcutta was maintainable although it may be pleaded by the defendants in
their written statement that the Calcutta High Court has no jurisdiction on
account of Clause 3 of BOL. For the purpose of the cause of action, it was
not necessary for the plaintiffs to plead the ouster of the jurisdiction of the
Calcutta Court. In fact, it was for the defendants to plead and prove the
ouster of the jurisdiction of the Calcutta Court and conferment of the
jurisdiction in the Singapore Court alone. On a bare reading of Clause 3 of
BOL, it is clear that any dispute arising under the BOL shall be decided in
the country where the carrier has its principal place of business and the law
of such country shall apply except as provided elsewhere in the BOL.
Therefore, the exclusion clause refers to the jurisdiction of a court where the
carrier has its principal place of business. Unless and until it is established
that the defendant-carrier has its principal place of business at Singapore, the
exclusion clause has no application. Simply because in the cause title of the
plaint, the plaintiffs have described defendant No. 2-Trustrade Enterprises
PTE Ltd. to be carrying on business at Singapore, would not ipso facto
establish the fact that the principal place of business of defendant No.2
(respondent herein) is/was at Singapore to exclude the jurisdiction of the
Calcutta Court which admittedly has the jurisdiction to try the suit.
Therefore, absence of reference of Clause 3 of BOL in the pleadings cannot
be said to be suppression of the material fact as the question of jurisdiction
would be required to be adjudicated and decided on the basis of the material
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placed on record at the trial.
In S.J.S. Business Enterprises (P) Ltd. vs. State of Bihar and Others,
(2004) 7 SCC 166, this Court has accepted the principle that the suppression
of a material fact by a litigant disqualifies such litigant from obtaining any
relief. The rule has been evolved out of the need of the courts to deter a
litigant from abusing the process of court by deceiving it. But the
suppressed fact must be a material one in the sense that had it not been
suppressed it would have had an effect on the merits of the case. It must be
a matter which was material for the consideration of the court, whatever
view the court may have taken. Reliance was placed on R. vs. General
Commrs. for the purposes of the Income Tax Act for the District of
Kensington, (1917) 1 KB 486.
Similarly under Clause 9 of BOL, the carrier was not made liable for
any loss or damage resulting from any act, neglect or default of his servants
in the management of animals and deck cargo. Under this clause, the carrier
is excluded from making good any loss or damage to the deck cargo which
has resulted from any act, neglect or default of his servants who are in the
management of such deck cargo. The facts are yet to come on record that
the loss or damage to the deck cargo was the result of any act, neglect or
default of the carrier’s servants who were in the management of the deck
cargo. In fact, this would be the defence if at all to be raised by the
defendants in their written statement. It was not at all required for the
plaintiffs to introduce this clause in their plaint. The liability of the
defendants to pay or not to pay any loss or damages to the cargo, would
depend on proof of certain necessary facts which could only be adjudicated
upon at the trial of the suit.
Clause 2 (General Paramount Clause) of BOL reads as under:
"The Hague Rules contained in the International Convention
for the Unification of certain rules relating to Bills of Lading,
dated Brussels the 25th August 1924 as enacted in the country of
shipment shall apply to this contract. When no such enactment
is in force in the country of shipment, the corresponding
legislation of the country of destination shall apply, but in
respect of shipments to which no such enactments are
compulsorily applicable, the terms of the said Convention shall
apply.
Trades where Hague-Visby Rules apply.
The trades where the International Brussels Convention 1924 as
amended by the Protocol signed at Brussels on February 23rd
1968. The Hague-Visby Rules apply compulsorily, the
provisions of the respective legislation shall be considered
incorporated in this Bill of Lading. The Carrier takes all
reservations possible under such applicable legislation, relating
to the period before loading and after discharging and while the
goods are in the charge of another Carrier and to deck cargo and
live animals."
Under this Clause of BOL, the Hague Rules contained in the International
Convention for the Unification of Certain Rules Relating to Bills of Lading,
Brussels, August 25, 1924 and Protocol to amend the said Convention,
Brussels, February 23, 1968, as enacted in the country of shipment shall
apply to this contract and if no such enactment is in force in the country of
shipment, the corresponding legislation of the country of destination shall
apply, but if no such enactments are compulsorily applicable then the terms
of the Convention shall apply, that is to say, in the absence of any enactment
in the country of shipment or in the country of destination, the Hague Rules
shall apply. Under Article 1, clause (c) of the Hague Rules , the goods shall
include goods, wares, merchandise, and articles of every kind whatsoever
except live animals and cargo which by the contract of carriage is stated as
being carried on deck and is so carried. Thus, the cargo which by the
contract of carriage is carried on the deck would not be goods under the
Hague Rules, whereas under Clause 9 of BOL deck cargo is also included
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for the purposes of the liability of the carrier if the loss or damage to the
goods is not on account of the neglect or default of the servants of the
carriage in the management. The question whether the cargo transported by
the carrier would be governed by the Hague Rules on account of Clause 2
(General Paramount Clause) or by Clause 9 of BOL would be a question
required to be determined by the Court after the parties placed all material
evidence before it and could not have been decided by the Division Bench at
the preliminary stage. Clause 19 of BOL permits the Carrier to stow the
goods either on deck or under deck without notice to the merchant as
received by him or at the Carrier’s option by means of containers or similar
articles of transport used to consolidate goods. Sub-clause (c) thereof
provides that the Carrier’s liability for the cargo stowed shall be governed by
the Hague Rules as defined above notwithstanding the fact that the goods are
being carried on deck and the goods shall contribute to the general average
and shall receive compensation in general average. This clause has
reference to Clause 14 of BOL which provides for general average and
salvage in respect of goods in the event of accident, danger, damage or
disaster before or after commencement of voyage. This clause has no
reference to the liability, if any, of the Carrier or the cargo ship for non-
delivery of the goods. In any case, without there being material on record,
Clause 19 cannot be relied upon for absolving the Carrier from his liability
for any damage or loss caused to the goods carried on ship.
It is urged by Shri C.S. Sundaram, learned senior counsel for the
plaintiff-appellants that on 4.12.2001 reply was filed to the application filed
by the defendants under Order VII Rule 11 of the Code wherein the
plaintiffs have denied that 578 out of 642 logs were carried on deck or that
456 out of the said 578 logs which were carried on deck had been short-
landed; that at the time of filing of the suit, information of the plaintiffs was
based on the six split bills of lading contained in Annexures "A" to "F" of
the plaint and the representations made on behalf of the defendant No. 2;
that it subsequently transpired that the allegation that 578 logs were carried
on deck is wholly incorrect and false; and that the original five bills of
lading more fully referred to in paragraph 7 of the plaint did not state that the
logs were carried on deck. From this, it appears that the plaintiffs are
alleging and asserting that the logs were not carried on deck and, therefore,
Clause 9 has no application. We are not recording any finding on this issue,
but on the basis of the aforesaid factual questions raised, the High Court
without going into the merits of the case could not have held that the
plaintiffs would not be entitled to a decree on account of Clause 9 of BOL.
Besides this, the Court will be required to give meaning to the words used in
Clause 9 as to whether the term ‘loss’ in the Clause has to be separately
read or it has to be read and construed as having reference to, damage to
deck cargo and whether it will cover the case of shortlanding of the goods
and not to damaged goods.
To get the order of stay of a suit on the ground of abuse of process,
the applicant must show that plaintiff would not succeed but that he could
not possibly succeed on the basis of the pleadings and in the circumstances
of the case. In other words, the defendant would be required to show very
strong case in his favour. The power would be exercised by the Court if
defendant could show to the court that the action impugned is frivolous,
vexatious or is taken simply to harass the defendant or where there is no
cause of action in law or in equity. The power of the court restraining the
proceedings are to be exercised sparingly or only in exceptional cases. The
stay of proceedings is a serious interruption in the right, that a party has to
proceed with the trial to get it to its legitimate end according to substantive
merit of his case. The court to exercise the power to stay the proceedings
has to keep in mind that the positive case has been made out by the
defendant whereby the court can reach to the conclusion that proceedings,
however, indicate an abuse of the process of Court. The High Court has
granted stay of proceedings as it found plaintiffs guilty of suppression of
jurisdictional clause of BOL and on the finding that plaintiffs have no case
on merits, and thus it would be abuse of process of the Court if the plaintiffs
are permitted to go ahead with the trial in Calcutta Court. We are not
satisfied that the defendants have made out the case on any of the counts.
It is urged by the learned senior counsel that where jurisdiction is
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founded on the basis of cause of action arising in Calcutta Court as non
delivery of logs are claimed to be at Calcutta, the defendants are entitled to
apply to the court to exercise its discretion to stay the proceedings on the
ground of forum non conveniens. It was urged before the High Court and by
Shri C.S. Sundaram, learned senior counsel appearing for the appellants
before us that the appellants will suffer irreparable injury if they are called
upon to file a suit at Singapore Court after the expiry of period of one year,
particularly so when the objection to the jurisdiction of the Calcutta Court
was raised by the defendants on 7.7.2001 and, therefore, the defendants
cannot claim advantage of forum non conveniens.
The argument is based on the basis of Clause (6) of Article III of the
Schedule to Indian Carriage of Goods by Sea Act, 1925, wherein it has been
provided that in any event the carrier and the ship shall be discharged from
all liability in respect of loss or damage unless suit is brought within one
year after delivery of the goods or the date when the goods should have been
delivered. By Act No. 28 of 1993, it has been provided that this period may
be extended if the parties so agree after the cause of action has arisen,
and further under the proviso a suit may be brought after the expiry of the
period of one year within a further period of not more than three months as
allowed by the court. Under Clause (6) of Article III, one year period was
provided to file a suit against the carrier or the ship for loss or damages
which, by amendment in 1993, has been extended to further period of three
months if allowed by the court and can also be extended for a period till the
filing of the suit if the parties to the suit agree after the cause of action has
arisen. Under Article I of the Schedule, ‘goods’ are defined and as per the
substitution brought about by Act No. 44 of 2000, the goods shall include
any property including live animals as well as containers, pallets or similar
articles of transport or packaging supplied by the consignor, irrespective of
whether such property is to be or is carried on or under the deck. By the
amended definition, the deck cargo is also included in the definition of
goods provided the deck cargo is in the form of containers, pallets or similar
articles of transport or packaging supplied by the consignor. Therefore, on
a first reading, the goods transported on a carriage, even if it is a deck cargo,
could be subject to the limitation as provided in Clause (6) of Article III, but
for Section 2 of the Act which specifies that subject to the provisions of the
Act, the rules set out in the Schedule shall have the effect in relation to and
in connection with the carriage of goods by sea in ships carrying goods from
any port in India to any other port whether in India or outside India. To
apply the provisions of the Act and the Schedule thereunder, the goods
should be carried by sea in a ship from any port in India to any other port in
India or outside India. In the present case, admittedly, the goods in
question were carried on the ship from Malaysia for discharge at Calcutta.
The goods having not been carried from any port in India, Clause (6) of
Article III of the Schedule and the provisions of the Act will have no
application for the purposes of limitation. Therefore, it cannot be said that
by virtue of the Act, the suit would be barred by limitation if the plaint is
required to be presented in the Singapore Court. None of the parties have
placed before us the Singapore law applicable to the facts of the present
case, nor any argument has been advanced on that basis. The plaintiff-
appellants on these facts cannot claim equity on the basis of the provisions
of the Act and the limitation provided therein.
In Smith Kline & French Laboratories Ltd. & Ors. Vs. Bloch [ (1983)
2 All ER 72], the first plaintiffs (the English Company) were
pharmaceutical company in England and were a wholly owned subsidiary of
the second plaintiffs (the U.S. Company) The defendant was a research
worker working in England. The defendant brought an action for damages
in Pennysylvania against both the English and the U.S. Companies. The
English Company (plaintiff) sought an injunction in the English Court to
restrain the defendant from further proceedings with his claim in
Pennysylvania or from making any further claims outside the jurisdiction of
English Court and further sought declarations that the proper law of
agreement was that of England and that the English Company were not
liable for the breaches complained of. The judge granted the injunction
sought. The defendant appealed and it was held while dismissing the appeal
that "the Court had jurisdiction to grant an injunction restraining a litigant
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from continuing proceedings in a foreign court where the parties were
amenable to the English jurisdiction and where it is satisfied (a) that justice
could be done between the parties in the English forum at substantially less
inconvenience and expense; and (b) that the stay of proceedings did not
deprive the litigant in the foreign proceedings of any legitimate personal or
juridical advantage which would otherwise have been available to him. The
jurisdiction was nevertheless to be exercised with great caution.
In Spiliada Maritime Corp Vs. Cansulex Ltd. [ (1986) 3 All ER 843], the
House of Lords explained the ambit of the principle of forum non
conveniens for issuing the order of stay and held:
"(1) The fundamental principle applicable to both
the stay of English proceedings on the ground that
some other forum was the appropriate forum and
also the grant of leave to serve proceedings out of
the jurisdiction was that the court would choose
that forum in which the case would be tried more
suitably for the interests of all the parties and for
the ends of justice
(2) In the case of an application for a stay of
English proceedings the burden of proof lay on the
defendant to show that the court should exercise its
discretion to grant a stay. Moreover, the
defendant was required to show not merely that
England was not the natural or appropriate forum
for the trial but that there was another available
forum which was clearly or distinctly more
appropriate than the English forum. In considering
whether there was another forum which was more
appropriate the court would look for that forum
with which the action had the most real and
substantial connection, e.g. in terms of
convenience or expense, availability of witnesses,
the law governing the relevant transaction, and the
places where the parties resided or carried on
business. If the court concluded that there was no
other available forum which was more appropriate
than the English court it would normally refuse a
stay. If, however, the court concluded that there
was another forum which was prima facie more
appropriate the court would normally grant a stay
unless there were circumstances militating against
a stay, e.g. if the plaintiff would not obtain justice
in the foreign jurisdiction."
In this case the Division Bench has held while considering the
question of forum non conveniens as under :
"Let us see, therefore, what are the factors
weighing in favour of the Indian Courts as against
the Courts of Singapore. The evidence regarding
shortage of goods was said to be in India. In our
opinion this evidence does not justify the
continuance of the action in the wrong Court,
because the shortage is practically admitted; in any
event the proof of it in Singapore is not a matter of
any very great difficulty. The other great factor in
favour of the Indian action is that the ship Fortune
Express lost the goods in the very voyage in which
it happened to travel to the Port of Calcutta and
that by reason thereof, it could be quite clearly and
easily arrested and the security obtained for the
action upon the lost logs. This, in our opinion,
takes a very one sided view of the matter. The
arrest conventions, the decision of the Supreme
Court in the case of M.V. Elezabeth, reported at
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1993 Supp.(2) SCC page 433, and the various
observations therein from, say paragraphs 75 to 85
of the judgment, no doubt show that the Fortune
Express could be arrested on an admiralty claim of
the present nature. That arrest makes the action of
the consignee very much secure. But we are not
deciding upon the issue of security; we are
deciding upon the issue of appropriate
commencement of the action. If the action can be
appropriately commenced in Calcutta, security can
be obtained and to that extent the consignee can
feel safe. This does not mean that the reverse is
true. It would be putting the cart before the horse
if one were to say that because the plaintiff can
commence an action and obtain security here the
action should be held as appropriately commenced.
This is not the correct way to look at the case at
all. If that were so, parties would be encouraged
not to pay the attention to solemnly agreed clauses
of forum selection and they would rush to the
Admiralty Court even contrary to such a selection
clause and obtain arrest, thereafter arguing, that the
arrest was most convenient for them, that it
produced a security from the shipper, and that if
decree should be passed in their favour there
would be no difficulty in its execution.
xxx xxx xxx
The factor for leaning heavily in favour of
Singapore is that the parties have chosen
Singapore law. We have not had any experts on
Singapore law attending the proceedings before us
and indeed this choice of law was also suppressed
by the plaintiffs like the choice of Court. No
doubt, arrest of a ship and the consequent
obtaining of security would be of great advantage
to a plaintiff if it were shown that the owners of
the ship were difficult to trade or had to sue. Not
so here. The owners have come forward. They can
be sued in their country. There is nothing to show
that they are so impecunious or that they are such
slippery customers that filing a suit against them in
Singapore would be a matter of no use at all.
These factors are not present in the case. We do
not see why in view of these circumstances we
should not hold the parties to their bargain and
send them away from a Court which they had not
agreed to come to."
From the aforesaid, it is apparent that the Court has found that the
Calcutta Court has jurisdiction to try the proceedings except when the forum
selection clause excludes the jurisdiction of the Court. The Court has also
found that the law of Singapore is not known. The case of the defendant
carrier/owner of the ship, of exclusion of the Calcutta Court, is solely based
on the exclusion clause which conferred jurisdiction on the Court where the
defendant has the principal place of business, which according to us has to
be determined only after sufficient material is placed before the Court. In
Advanced Law Lexicon, 3rd Edition 2005, by P.Ramanatha Aiyar, at page
3717, ‘principal place of business’ is defined as under:
"where the governing power of the corporation is exercised,
where those meet in council who have a right to control its
affairs and prescribe what policy of the corporation shall be
pursued, and not where the labour is performed in executing the
requirements of the corporation in transacting its business.
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The place of a corporation’s chief executive offices, which is
typically viewed as the "nerve center".
\005\005.. the place designated as the principal place of business of
the corporation in its certificate of incorporation."
From this, it appears that the principal place of business would be where the
governing power of the corporation is exercised or the place of a
corporation’s Chief Executive Offices, which is typically viewed as the
nerve center or the place designated as the principal place of business of the
corporation in its incorporation under the various statutes. Therefore, to
arrive at a finding as to which is the principal place of business, the parties
would be required to place the relevant material before the Court. The Court
cannot arrive at a finding of a particular place being the principal place of
business at the preliminary stage of the hearing of the suit. The defendants
have not placed any material before the Court that the Singapore Court is
another available forum which is clearly or distinctly more appropriate than
the Indian Courts. The Court has not taken into consideration that the action
commenced by the plaintiff-appellants in Calcutta Court founded on the
facts which are most real and substantially connected in terms of
convenience or expense, availability of the witnesses and the law governing
the relevant transaction in the Indian Court. There is no averment in the
application filed by the defendants that continuance of the action in Calcutta
High Court would work injustice to them because it is oppressive or
vexatious to them or would be an abuse of the process of the Court. There
was no material before the Court how the trial at Singapore would be more
convenient to the parties vis-‘-vis the trial of the suit at Calcutta and that
justice could be done between the parties at substantially less inconvenience
and expense. Nor it has been shown that stay would not deprive the
plaintiffs of legitimate personal or juridical advantage available to them. In
the facts of the case, we are not satisfied that there is other forum having
jurisdiction, in which the case may be tried more suitably for the interest of
all the parties and for ends of justice.
The Rules of the High Court of Calcutta on the Original Side,
Appendix No. 5 under the caption ‘Admiralty Rules’, the Rules for
regulating the procedure and practice in cases brought before the High Court
at Calcutta under the Colonial Courts of Admiralty Act, 1890 were framed.
The suit was defined to mean any suit, action, or other proceedings instituted
in the said court in its jurisdiction under the Colonial Courts of Admiralty
Act.
Rule 3 provides for institution of the suit. Under this Rule, a suit shall
be instituted by a plaint drawn up, subscribed and verified according to the
provisions of the Code of Civil Procedure.
Rule 4 is in relation to the arrest warrant after affidavit which reads as
under:
"In suits in rem a warrant for the arrest of property
may be issued at the instance either of the plaintiff
or of the defendant at any time after the suit has
been instituted, but no warrant of arrest shall be
issued until an affidavit by the party or his agent
has been filed, and the following provisions
complied with:-
(a) The affidavit shall state the name and
description of the party at the whose
instance the warrant is to be issued, the
nature of claim or counter-claim, the name
and nature of the property to be arrested, and
that the claim or counter-claim has not been
satisfied.
(b) In a suit of wages or of possession the
affidavit shall state the national character of
the vessel proceeded against; and if against a
foreign vessel, that notice of the institution
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of the suit has been given to the Consul of
the State to which the vessel belongs, if
there be one resident in Calcutta and a copy
of the notice shall be annexed to the
affidavit.
(c) In a suit of bottomry the bottomry bond, and
in a foreign language also a notarial
translation thereof, shall be produced for the
inspection and perusal of the Registrar, and
a copy of the bond, or of the translation
thereof, certified to be correct shall be
annexed to the affidavit.
(d) In a suit of distribution of Salvage the
affidavit shall state the amount of Salvage
money awarded or agreed to be accepted,
and the name, address and description of the
party holding the same.
Rule 6 provides that in suits in rem no service of writ or warrant shall
be required when the attorney of the defendant waives service and
undertakes in writing to appear and to give security or to pay money into
Court in lieu of Security.
Rules 27 provides for caveat to be filed against the arrest warrant.
The Court can issue the warrant for the arrest if the affidavit contains the
particulars as required under Rule 4.
Rule 6 permits the attorney of the defendant to ask for waiving of
warrant of arrest by giving an undertaking in writing to appear and to give
security. In the present case suit was instituted on 27.3.2000 and affidavit
was filed for issuance of warrant of arrest of the vessel along with tackle,
apparel and furniture as the same day the court directed for the arrest of the
vessel. On 12.4.2000 letter of intention regarding furnishing guarantee on
behalf of the Owners & Parties, Vessel M.V. Fortune was filed and on the
same date the vessel was directed to be released. In the order of release
dated 12.4.2000 the court has specifically mentioned that the order of
release was passed without prejudice to the rights and contentions of the
owner of the vessel that the suit is not maintainable. Thus, the
maintainability of the suit filed by the plaintiff-appellants was the question
raised before the court and the court was quite aware of the fact that the
defendants are submitting to the jurisdiction of the court subject to their
rights and contentions that the suit is not maintainable in the Calcutta High
Court. Thus, it cannot be said that at the time of the filing of the letter of
intention for furnishing guarantee parties were not aware that the question of
the jurisdiction of the court would be raised. Not only the parties the court
was also aware that the issue of jurisdiction of the court would be in
question. The defendants have not pressed for dismissal of the suit even
when the bank guarantee was furnished on 17.5.2000. The defendants have
not asserted dismissal of suit on the ground of jurisdiction of the Court at the
outset when letter of intention was furnished by the Punjab National Bank
on their behalf nor at the time of furnishing bank guarantee and waited till
7.7.2001 to file an application. From reading of Admiralty Rules, it appears
that it is a usual and common practice to issue warrant of arrest if the
affidavit filed under Rule 4 contains all particulars required. Thus, it cannot
be said that arrest of the ship was obtained by the plaintiffs suppressing
material facts which would warrant stay of suit by the Court.
For the reasons aforementioned, we are of the view that the
defendants have not made out a case for stay of the proceedings of
Admiralty Suit No. 11 of 2000 pending in the Calcutta High Court and the
High Court has committed an error in passing the order of permanent stay
and discharging the bank guarantee. The appeal is allowed with costs. The
order of the Division Bench of the High Court is set aside. The suit shall
now proceed in the Calcutta Court in accordance with law.